As most Americans know, we’re deep into tax season right now thanks to a federal extension that allows taxpayers to file by May 17 this year, rather than the typical April 15 date. But while legal citizens know they have to get their financial documents in order, immigrants might be a bit confused about what their tax obligations entail.
What some may not know is that immigrants are also expected to pay taxes on any earned income, cash, or checks. Regardless of your immigration status, if you have earned money in the United States, the law states that it must be reported to the Internal Revenue Service (IRS). While that might sound like an overwhelming or even scary responsibility, it’s in the best interest of every immigrant working in the United States to do so.
In this guide, we’ll look at why you should file your taxes regardless of your immigration status.
Why file taxes if you’re not a citizen?
According to the IRS, the reasons immigrants must pay U.S. taxes if they’ve earned income in America are simple:
- They’re obligated by law
- It’s an opportunity to contribute
- To document compliance and residency
The first of those three reasons are easy to figure out. No one wants to break the law, especially when it could negatively impact an individual’s future immigration status. However, the other two might leave you with some questions.
The second bullet is a morality-based point that suggests that if you’re benefiting from America and its work opportunities, you likely want to give back, and the easiest way to do so is to pay taxes on earned income.
The third bullet is a little different. To document compliance and residency refers to the fact that an immigrant that hopes to become a legal citizen of the United States can use their taxes to support their immigration petitions/applications. By demonstrating they contributed and followed the law, it might bolster their immigration application and hasten the naturalization process.
How can someone file taxes if they don’t have a social security number?
One of the biggest questions immigrants typically have is how to go about filing taxes given the fact that many don’t have social security numbers.
As you might have guessed, the IRS has come up with a solution to this. The IRS requires filers to use an Individual Taxpayer Identification Number or ITIN. This identification number is for federal tax filing purposes only and allows immigrants to be in compliance with tax filing rules. It cannot be used as a substitute social security number, but it does offer some benefits including the fact that ITIN holders are eligible for the Child Tax Credit (a healthy $2000) and the Additional Child Tax Credit which can be up to $1,400 in refundable credits per qualifying child.
The one hurdle is that qualifying children must have a social security number themselves.
The IRS began issuing ITIN 25 years ago so that individuals without a social security number could file. To obtain an ITIN, individuals can apply by using a W-7 form they find at the IRS website.
Is there anything for an immigrant to be concerned about when filing taxes?
Concerned individuals who worry that the legality of their status in the United States might be exposed by filing taxes need not worry. Confidentiality rules protect against immigration enforcement. The Taxpayer Bill of Rights lays out this rule as well, reassuring those filing that their information will not be shared. It states:
Taxpayers have the right to expect that any information they provide to the IRS will not be disclosed unless authorized by the taxpayer or by law. Taxpayers have the right to expect appropriate action will be taken against employees, return preparers, and others who wrongfully use or disclose taxpayer return information.
For further reassurance, immigrant taxpayers should remember that by filing you’re taking the step to ensure you’re in compliance with the law. Not filing is actually a more risky choice.
Whether you’re operating your own business or collecting wages under the table, by complying with the IRS and reporting your earnings, you’ll be:
- Following the law
- Potentially benefit from tax credits
- Documenting your compliance
- Documenting your residency
- And possibly furthering an application for U.S. citizenship
But it’s understandable if the American tax system feels a little confusing or overwhelming. If that’s the case, the good news is there are helpful tax experts available to help and they too are committed to confidentiality.
They assist you with your taxes so that you can rest assured you’ve met your filing obligations without jeopardizing your immigration status. These tax experts can even walk you through filing a Form W-7 for an ITIN so you can begin the process of procuring your own identification number to make tax filing possible.